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As hundreds of our hard-earned billions are being poured into corrupt, greed-driven, lethally inefficient banks, the Administration, Congress and corporate media have studiously avoided the one sector of the banking industry that actually works—the credit unions.
Throughout the United States there are hundreds of these people-powered banks that have succeeded and prospered while all around them the traditional banking has collapsed into ruin, taking our general economy with them.
Because unlike those private banks, the America’s 10,000 not-for-profit credit unions are controlled by the people who deposit their money there. Loans are made only to members. The deposits are federally insured, and investments are monitored by the depositors and, allegedly, by federal regulators.
For the most part, their decisions are made democratically. Their boards of directors are elected. Increasingly those decisions have been oriented funneling resources into new green industries whose future is bright, and that actually serve that public rather than raping it.
To be sure, there are those credit unions that are plagued with problems. Like all institutions, they all have their flaws. As creatures of the democratic process, they are capable of making wrong decisions while driving those involved stark raving mad.
But by basic mandate, credit unions are accountable, a concept almost completely lacking from those mega-banks “too big to let fail.”
In fact, Obama’s fiscal 2010 budget contains $234.6 billion in Community Development Financial Institution funds. Some $113 billions is earmarked for “financial issues in underserved communities,” according to the Treasury Department, along with another $80 million for the new Capital Magnet Fund aimed at “enhancing investments in affordable housing opportunities for the very poorest Americans.” This money, says a May 7 Treasury Department release, “should be a boon to Credit Unions.”
The numbers are a great improvement over the Bush era. But they pale alongside the torrent of cash slushing into failed private banks.
Since the founding of the first true credit unions in Germany beginning in 1852, the institutions have spread throughout Europe, India and North America. The first came to the US in New Hampshire in 1909.
Edward A. Filene, the Boston merchant whose famous basement offered bargain clothing to working people, Basic principles include the idea that only members can borrow money from a credit union, and that the loans must be “prudent and productive.”
Because loans involve the money of a close-knit group, and must be approved by members whose money is at risk, the credit unions are a model of how the banking system might be remade.
On average about 10 of the nation’s 10,000 credit unions fail each year. Because depositors’ money is federally guaranteed, they may lose their bank, but not their deposits.
Bob Fitrakis and Harvey Wasserman write for The Free Press.